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Trucking Trends: 100 Loads for Every Truck? Houston, Energy Sector Drive a Sizzling Flatbed Freight Market

By Mark Montague, DAT Solutions

While van freight rates have calmed down after peaking in early January, flatbed prices and shipper demand remain intensely hot. By mid-May, flatbed rates were at their highest level since DAT began publishing spot market rates in 2010.

Here's how the national average flatbed rate in May compares with previous years:

May 2016: $1.92 per mile
May 2017: $2.10 per mile
May 2018: $2.71 per mile (through May 15)

Line haul rates, which exclude the fuel surcharge, have risen about 35% since May 2016. When fuel is included, there's been a 41% increase in the total rate paid by brokers to the carriers.

The flatbed load-to-truck ratio—that is, the number of loads posted on the spot market relative to the number of trucks—has been above 100 since the middle of March. That means on average there have been more than 100 flatbed loads for every available truck.

A hundred loads per truck. That's literally off the charts.

What's driving demand? The energy sector is a huge driver of demand for flatbed trucks, and the availability of freight to support this industry has been robust.

The oil industry seems to be back after a steep downturn starting in late in 2014 when oil prices dropped from over $100 per barrel (West Texas Intermediate crude, or WTI) to below $30 per barrel by February 2016.

With the current price hovering around $70 a barrel, production is ramping up—and with it we're seeing more activity in the flatbed market, where equipment

is needed to haul materials and heavy machinery. Much of that activity is centered in and around Houston: the top four flatbed lanes in the country originate or end in Houston.

Oil and natural gas byproducts also feed plastics production, which has fueled a boom for the petrochemical industry along the Gulf Coast. This has created construction demand in areas far from the oil fields.

The electronic logging device mandate, which took effect last December and entered a "full enforcement" phase in April, is another factor that's added pressure on already-tight flatbed capacity.

Flatbed fleets tend to be smaller than their van and reefer counterparts, and small carriers were the most likely to wait until the last minute to implement ELDs. Many are still adjusting to accommodate the more restrictive schedules of electronic logs.

The ELD rule penalty phase coupled with an expected surge in freight and oil prices should bode well for load-to-truck ratios and carriers seeking higher prices. I think we're gonna need a bigger chart.

Mark Montague is senior industry pricing analyst for DAT Solutions, which operates the DAT® network of load boards and RateView rate-analysis tool. He has applied his expertise to logistics, rates, and routing for more than 30 years. Mark is based in Portland, Ore.